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For quite sometime now I have observed the back and forth discussion on
whether the markets obeyed Fibonacci ratio's or not, were they able to
be used to make money off, can research be done to find out if past
swings stopped on Fibo numbers. Well I'm here to start a new line of
thinking and throw a complete spanner in the works of everything that
has been discussed so far.
It has amazed me that in all these discussions no one has even mentioned
what I am going to say. I am a firm believer in the notion that each
swing in the market is related mathematically by a very limited number
set (read any of Bryce Gilmore's books) but anyone who truly believe
that every swing will relate to the last swing or the last set of 3
swings by a Fibonacci number is living in fantasy land. Yes, many times
a market will stop cold right on one of the key contraction or expansion
ratio's but all this completely misses the real point.
Here it is. It is NOT the fact that markets stop on fibo numbers that
is so important, by FAR AND AWAY of more importance is the fact THEY
DON'T!! Now that may seem a totally ludicrous statement. But I'm
talking from real experience here of 20 years application, so give my
words some thought before rushing out to give negative comments unless
you TRULY know what your talking about.
The real power of Fibo numbers in combination with Elliott wave is as
follows. We all know Elliott provides a road map of the market. If you
have the correct road map you have a very powerful key. But even having
the correct road map won't solve all your problems. There will still be
many roads a market may take without negating the road map you have.
This is where fibo ratio's come in.
The power of Fibo numbers occurs when markets turn either side of
particular contraction or expansion ratio's. There power is NOT when
they stop cold on the 61.8% level..or that can still be extremely
useful. Now you might ask how on earth can it be useful to know that
market reversed anywhere between say 1-62% of a previous move? A good
question. There's an awful lot of points in between. The power is the
mere fact a market has failed to exceed that retracement point. THAT IS
THE KEY!!!!
Wouldn't you like to know whether a move was going to be big? Small? Was
going to continue creating another set of wave counts in the same
direction? Well often time the limited rules of Elliott can't help you,
but in unison with the guidelines laid down by GLEN NEELY in his
monumental work, the use of Fibo ratios add an EXTREMELY POWERFUL tool
to the analysis. It can enable you to eliminate a whole swag of wave
counts that no one else can.
So Clyde and others, if you truly want to discover the power of
Fibonacci, redo your analysis on past historic swings, but this time see
what can be learned by the correlation between the size of retracements
and its future implications to the next few swings. You will learn a lot
more about market behaviour than trying to carry out an ultimately
pointless exercise to show if past swings stop on Fibo ratio's.
Regards,
Adrian Pitt
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